Can anyone explain this to me in detail or direct me to a site that does. I do not undertsnad it at all. Thank you!
Google CAGED
Search CAGED in the lessons on UG

Read some stuff from there. and anything you don't understand, ask about in this thread.
My name is Andy
Quote by MudMartin
Only looking at music as math and theory, is like only looking at the love of your life as flesh and bone.

Swinging to the rhythm of the New World Order,
Counting bodies like sheep to the rhythm of the war drums
best friggin system in the world.
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There is no music but metal and muhammad is its prophet.
read Fretboard Logic, I think it's the first and probably best explanation of CAGED. I found it at my local library, and it's on a few torrent websites as well.
Essentiall you build your fretboard knowledge through your familiarity with open chords. Most of us know all five open chords. The CAGED systems uses that to help you be able to play a scale all over the neck. As an added bonus, MIT has a book that helps you to see the relationships of the roots which Fretboard Logic negelcts IMO. Its a fretboard familiarization book but the name is escaping me at the moment. Brad somebody wrote it I think.
I think it's the Fretboard Workbook. I personally am not a fan of it, but a lot of people seem to like it. My main problem is that it seems to explain the CAGED system in a much more roundabout and traditional way, which is what I was having trouble wrapping my head around in the first place. It builds the scales from intervals, which just seems an unnecessarily difficult way to explain the system. It does help through sheer repetition of writing the intervals out in different keys, but man is it boring.

Fretboard Logic was nice b/c it's simply 30 pages...2nd volume is longer and more practical for getting all the different chord types, but the basic foundation is within those first 30 pages. And it took no time to really comprehend and I've just spent years applying it to everything I know since. Had I read the Fretboard Workbook first, I probably wouldn't have felt the same motivation to keep laying because it's a much more painstaking process to learn the same info, and I think most guitarists head to Fretboard Logic because they need a more intuitive explanation that what's traditionally provided by theory books.